(1) The proceeds of every sale effected under section 89 and confirmed under section 90, shall be applied first in payment of all costs, charges and expenses incurred in connection with the sale or attempted sales, secondly in payment of any or all interest due on account of the mortgage in consequence whereof the mortgaged property was sold, and thirdly in payment of the principal due on account of the mortgage including costs and charges incidental to the recovery.
(2) If there be any residue from the proceeds of sale, the same shall be paid to the persons proving himself interested in the property sold, or if there are more such persons than one, then to such persons upon their joint receipt or according to their respective interest therein, as may be determined by Land Development Bank:
Provided that before any such payments are made, the unsecured dues owing -
(a) from the mortgager to the Land Development Bank may be adjusted; and
(b) from any member or past member to whom the mortgager is indebted, may also be adjusted under the written authority given by such member and past member, and after holding such inquiry as may be deemed necessary